Could AI promote longer client-agency relationships?

Agency leaders spend a lot of time thinking about how to more effectively defend accounts or to discourage marketers from reviewing them quite so frequently in the first place. Ashley Bolser, founder of Leeds indie shop Bolser, tells The Drum that means asking questions such as, “How do we embed ourselves? How do we become so useful to clients that they want to keep using us, even though the people who brought us in have moved on?”

One hypothetical answer could lie in two letters you’ve already heard plenty about. In three to five years’ time (the average duration of an agency-client relationship), generative AI solutions might already be so deeply embedded in brand organizations that switching from one agency provider to another would require root-and-branch change. Given the pace of technological change, agency appointments made in 2024 might have long-lasting effects on brands. The stakes of going to a review would be much higher, incentivizing longer-term relationships with an agency.

PJ Pereira, co-founder of Pereira O’Dell, tells The Drum: “Once our systems, our way of producing, our workflows are integrated with our clients, it becomes much more of a headache to jump to another agency, to start a new relationship and reset those systems.

“I mean that in the healthiest way. I’m an optimist; I think AI is going to bring clients and agencies closer together and maybe bring back the old, longer relationships that we miss a little.”

The company just invested in an AI-dedicated business unit out of its San Francisco office, with the hope that its proximity to the bloom of AI-focused startups in the city will add to its client allure. The agency previously partnered with adtech firm Plan.Net to create an AI-powered chatbot that draws strategic insights from demographic data.

It’s not the only agency considering the impact that AI-enabled creative products, or AI-related tech services, could have on its business model. David DiCamillo, chief technology officer at Stagwell-owned Code & Theory, tells The Drum: “It’s the same angle as data management for clients. If you have an agency managing your brand’s data, how do you exfiltrate yourself from that agency? It’s very difficult.”

If we broaden our scope to include other forms of AI applications in marketing, this theory has already been put to the test. Phil Tolliday, global head of marketing science at GroupM Nexus, tells The Drum that Copilot, GroupM’s AI-powered performance media tool, has helped it boost retention since it was first launched in 2015.

“My team is now adding in custom KPIs, custom outcomes and bespoke attention-based elements that will correlate with brand goals,“ he says. “It’s key for retention and is a bridge between the short term and long term. We’re positioning marketing science as a central part of joint business plans with our biggest global clients to make sure that we’re building the roadmaps around this.”

Michael Chadwick, Cheil UK’s head of strategy and experience, meanwhile says: “Today, agencies sell systems as much as they sell ideas. For client teams, the challenge of landing their brands and communications out into the entire marketing ecosystem is vast and they need agencies that can build and manage systems that enable this efficiently, and effectively.”

George Forge, vice-president of client technology at US agency Quad, agrees, adding: “With its capacity to harness data and automation, AI gives agencies unique retention strategies that can deepen relationships and deliver real value for clients.”

DiCamillo adds that agencies might do well to be wary of the long-term impacts on relationships. Total dependence on an agency’s AI expertise might not actually promote much organic investment down the line. And agencies don’t want a client that resents their presence.

“We want to build capabilities for clients, not make them fully dependent on us.,” he says. “We’re going to embed AI in your business, we’re gonna teach you how to run it, we’re going to teach your engineering team how to own it and we’re happy to help for as long as possible. But we’re a consultant and a partner – while we want to remain sticky, we feel like that should be done in the service of good work.”

At indie agency Milk, chief innovation officer Rey Peralta is following a similar line of thinking. He says AI tools will make it possible for clients to be served by “small teams that have incredible tools available to them,” enabling smaller agency shops to become more competitive. “That allows us to be more creative, to be more focused and do better work – and have better margins and be better partners for the brand.”

Annie Bedard, head of experience design at production studio Unit9, and Interstate Creative Partners’ Ken Goodbody both suggest agencies might be better off building longer-term relationships by emphasizing cost savings and the increase in outputs for clients – especially if a long-term relationship takes the shape of several discrete projects, rather than a traditional agency-of-record arrangement.

“AI’s biggest impact on client retention is the higher level of service we’re able to deliver to our partners across the entire project lifecycle,” says Bedard. “At its core, AI allows us to create internal efficiencies from research through to development. Leaning into AI innovation helps our clients stay at the forefront of experience and engagement with their audiences and ultimately keeps them coming back to work with us again in the future.”

Goodbody adds: “If you’re seeing good downstream benefits from the technology, then the client should benefit from that and you should have a washback on the agency.”

This impact is, for the most part, a speculative one. Most clients aren’t yet embracing fully bespoke solutions, says DiCamillo. Given the immaturity of the sector, a serious investment in one set of tools over another or in a proprietary, custom solution would be quite a gamble from the perspective of an advertiser.

He explains: “The desire to experiment, to put things out to their teams and start seeing the effects on their business is immediate. The willingness to build something custom... that’s going to be pervasive throughout their organization. We haven’t seen a lot of buyers yet.

“Do we want to be sticky with those clients? Absolutely. Is that going to help us be there for five, six years? Not yet. Savvy marketers don’t want to sink an investment into a custom IP product at this time.”